Home Buyers Gaining More Leverage in 36 out of 50 Largest Markets Per Latest Month’s Supply Estimates

Highlights

In January, the pace of home sales relative to inventory dropped to the lowest point since September 2016 in the 50 largest markets in the country. If trend holds, this spring will see the slowest-moving homebuying season in three years.

Realtor.com’s months supply 50-market composite increased to 4.59 months, up 15% and 9% compared to 2018 and 2017, but down 12% over 2016.

Locally, 36 of the 50 largest markets in the country are now cooling down on a yearly basis, and 5 of the 50 are moving slower compared to 2015.

At the current cooling pace, it would take 28 months for the overall housing market to reach true buyer friendly conditions.

In January, the pace of home sales relative to inventory dropped to the lowest point since September 2016. Realtor.com’s month’s supply, which measures the speed of the market by looking at the ratio of active listings to closings, reached 4.59 months in the 50 largest markets combined, a 1% increase over December, and a 15% increase over last January (a higher month’s supply figure indicates a slower, more buyer-friendly market). Locally, 36 of 50 markets are now slowing down on a yearly basis, and 28 of 50 are doing so on a monthly basis. Despite slight improvements to affordability in many markets early in the year, the rate of absorption continues to slow, and the overall trajectory confirms this will be the coolest home buying spring in three years. As the home-buying season begins to ramp up, sellers are encountering more challenging conditions compared to last year, as more buyers enter a holding pattern. Knowledge of increased options, lower mortgage rates and further potential price deceleration, is guiding many buyers into a wait-and-see approach. In fact, the share of consumers who think it’s a ‘bad time to buy’ has increased visibly over last year, with home buying sentiment continuing to decline in February. This month’s month supply data shows consistent signs of deceleration, but also hints of potential re-acceleration. The slowdown in inventory absorption appears to be easing in a few markets; however, movement is unlikely to be sustained and change the cooling trajectory.

Buyer’s Market, Seller’s Market, or Balanced?

Realtor.com’s month’s supply measures the speed of the market by looking at the ratio of active listings relative to the number of home sales. The ratio is adjusted seasonally so markets can be tracked on a monthly basis. A balanced market typically equates to 6-7 months supply; while a buyer’s market equates 7 months supply and above; and a seller’s market equates to 6 months supply and under. Read more about month’s supply methodology here.

Coolest markets compared to last Spring: Month’s supply in 36 of the 50 markets is now above last January levels, and should present more challenging conditions for sellers compared to recent years. The top 5 cooler markets compared to last Spring include: San Jose, CA; Seattle, WA; San Diego, CA; Grand Rapids, MI; and Dallas, TX. The pace of absorption in these previously boiling markets is up 66% year-over-year on average. These rapidly cooling markets are also emerging from seller-friendly conditions and still average a relatively low 3.8 month’s supply. Interestingly, this month’s data shows hints of potential re-acceleration but it’s too soon to tell if they will be sustained enough to effectively change the cooling trajectory. For instance, all 5 California markets are much cooler than last January, but the cooling appears to be easing, with month’s supply up 57% year-over-year, but down 1% month-over-month on average respectively.

Fastest cooling markets compared to last month: Nationally, buyers will command more leverage this spring, and some markets in particular markets are taking even bigger steps toward cooler conditions. The top 5 fastest cooling markets compared to last month include: Rochester, NY; Las Vegas, NV; Grand Rapids, MI; Salt Lake City, UT; and Orlando, FL. The pace of absorption is slowing quickly in these previously hot markets, with month’s supply up 11% month-over-month on average.

Hotter Compared to last Spring: Month’s supply in 13 of 50 markets is now below last year levels. The top 5 markets heating up the fastest on a yearly basis: Birmingham, AL; Kansas City, MO-KS; Oklahoma City, OK; Albuquerque, NM; and Cleveland, OH. The rate of absorption has accelerated visibly over the past year, with month’s supply down 13% year-over-year. However, these top 5 rapidly heating markets also are coming from seller-friendly conditions and still average 4.3 month’s supply, which is in line with the rest of the country.

Four year movers: More markets continue to slow to more balanced conditions found in the market four years ago. Month’s supply in 11 of 50 metros is now above January 2015 levels. In particular, California and Texas have seen have seen a considerable slowdown. The top 5 cooling markets relative to 2015 baselines are: San Jose, CA; Houston, TX;Austin, TX; Dallas, TX; and San Francisco, CA.

Realtor.com Month’s Supply for Top 50 Largest Markets (January 2019)

Metro

Region

Months Supply SA

Y/Y Change

M/M Change

Albany, NY

Northeast

7.4

17%

0%

Albuquerque, NM

West

4.5

-11%

2%

Austin, TX

South

4.7

23%

6%

Baltimore, MD

South

5.1

-4%

-7%

Birmingham, AL

South

4.3

-18%

9%

Boston, MA

Northeast

4.4

46%

5%

Buffalo, NY

Northeast

2.5

-7%

0%

Chicago, IL

Midwest

6.4

5%

1%

Cincinnati, OH

Midwest

3.2

4%

-1%

Cleveland, OH

Midwest

4.3

-7%

-1%

Dallas, TX

South

5.4

47%

5%

Detroit, MI

Midwest

4.3

33%

5%

Grand Rapids, MI

Midwest

3.1

50%

10%

Houston, TX

South

7.1

27%

4%

Indianapolis, IN

Midwest

3.4

-3%

-1%

Jacksonville, FL

South

5.5

15%

0%

Kansas City, MO

Midwest

4.0

-17%

3%

Las Vegas, NV

West

3.8

37%

13%

Los Angeles, CA

West

5.3

41%

-4%

Louisville/Jefferson County, KY

South

3.7

14%

-12%

Memphis, TN

South

4.4

-1%

2%

Miami, FL

South

8.9

25%

-7%

Milwaukee, WI

Midwest

3.6

-3%

-6%

Minneapolis, MN

Midwest

3.3

12%

5%

Nashville, TN

South

4.7

37%

4%

New Orleans, LA

South

6.6

1%

6%

Oklahoma City, OK

South

4.5

-14%

-2%

Omaha, NE

Midwest

2.8

13%

-1%

Orlando, FL

South

3.8

19%

8%

Philadelphia, PA

Midwest

5.8

17%

5%

Phoenix, AZ

West

3.6

17%

3%

Pittsburgh, PA

Northeast

5.7

-5%

0%

Portland, OR

West

3.9

36%

-3%

Providence, RI

Northeast

5.4

23%

-3%

Raleigh, NC

South

4.0

15%

3%

Richmond, VA

South

3.9

21%

0%

Riverside, CA

West

6.0

40%

-1%

Rochester, NY

Northeast

5.0

45%

15%

Salt Lake City, UT

West

3.5

25%

10%

San Antonio, TX

South

6.1

19%

3%

San Diego, CA

West

4.8

65%

2%

San Francisco, CA

West

3.2

44%

-3%

San Jose, CA

West

3.2

96%

0%

Seattle, WA

West

2.6

70%

0%

Tampa, FL

South

4.4

23%

-3%

Tucson, AZ

West

3.2

-2%

5%

Tulsa, OK

South

5.4

-3%

2%

Virginia Beach, VA

South

7.0

0%

-4%

Washington, DC

Northeast

4.0

8%

0%

Worcester, MA

Northeast

4.3

16%

2%

Methodology: Analysis is based on realtor.com‘s seasonally adjusted month’s supply estimates for 50 of the largest metropolitan areas in the country. With data as of January 2019. Month’s supply measures the speed of the market by calculating the number of months it would take for inventory to deplete at the current pace of sales. Specifically, it is calculated as the ratio of active residential listings relative to the number of sales. The ratio is adjusted seasonally to remove variability during the year so markets can be tracked on a monthly basis. A balanced market typically equates to 6-7 months supply; while a buyer’s market equates 7 months supply and above; and a seller’s market equates to 6 months supply and under. Nationally, NAR reported months supply at 3.9 months in January, up 15% over last year, approaching 2016 levels, but still below 2014, in line with our findings.

*Realtor.com’s 50-market month supply composite is a weighted index based on sales for each market in a given period. The following markets were excluded from rankings this month as we review their data: New York; Atlanta; St. Louis; Denver; Charlotte; Sacramento; Columbus; Hartford.

The impact of Brexit alone, even in the worst case scenario of an exit with no agreement, will not cause recession in the U.S. However, additional shocks could produce a recession in 2020. A mild slowdown in the housing market has already begun. Our 2019 housing prediction is that home sales will drop 2 percent. Some Brexit scenarios will negatively affect 2019 home sales even further, but will have little impact on prices.

The US economy is at the top of the business cycle. The unemployment rate for January 2019 was 4.0 percent. Gross Domestic Product (GDP) for the fourth quarter of 2018 is expected to have increased 3.4 percent. Our economy is producing at full capacity. Workers have finally seen some stronger income growth. The Federal Reserve is more than three years into its tightening cycle, having raised rates gradually, but consistently since December 2015.

When rates rise sufficiently, businesses cut back investment and households hold back on spending, particularly on large ticket items like automobiles and homes that are typically financed. The economy slows and the risk of inflation falls. The problem is that the anti-inflationary policies raise the risk of recession. In a slow growing economy it takes a smaller shock to cause worry, reducing business and consumer confidence, resulting in declining investment and spending. If the shock is too great, panic sets in causing confidence, spending and investment to plummet and recession ensues.

So, what are the shocks that we should be concerned with? There is no one particular shock on the horizon that is likely to send us into recession. However, a series of shocks can accumulate sending the economy into a tailspin. If you have been reading the economic news, you will know that economists are concerned about several issues:

crisis in the shadow banking system, which provides nearly half of all mortgages, yet falls outside of the regulatory regime that protect formal banks1; and

the possibility of Britain leaving the European Union (EU) without an agreement on future trade, economic, travel and immigration policies.

What is Brexit?

Our focus here is to examine the impact on the U.S. economy and housing market of various scenarios for the exit of Britain from the EU. There are an almost endless variety of policy outcomes that could come from negotiations before the March 29 exit date. We can group these into the following Brexit scenarios2 ordered by level of severity:

No Brexit – Britain holds another referendum. The people vote to stay in the union, Parliament accepts the will of the people and Europe agrees to rescind the exit.

Customs Union Brexit – Britain exits with the agreement worked out by Prime Minister Teresa May and the EU, but initially rejected by Parliament. This provides a common customs agreement for goods and ensures a transparent border for Northern Ireland.

Soft Brexit – Britain and the EU agree to a trade deal that is similar to that between Norway and the EU with additional components such as a soft border between Ireland and the Northern Ireland.

Hard Brexit – Britain and the EU would work to keep tariffs down, compared to the World Trade Agreement default. Unlike the Customs Union or Soft Brexit scenarios, hard borders would be constructed to check regulatory compliance. This would likely require a hard border in Ireland, something that is unpopular amongst the public and in Parliament.

Britain Exits with no Agreement – Britain fails to develop an agreement with Europe. Their relationship reverts to the agreements of the World Trade Organization.

What are the prospects for these scenarios? The Customs Union Brexit, which Prime Minister Teresa May negotiated with the European Union was roundly rejected by Parliament on January 15. May presented an alternate proposal – Plan B – on January 21, but it was dismissed by lawmakers as being too close3 to the original agreement.

Meanwhile, Parliament is insisting on having more of a say in the agreement. Some prefer a hard exit, some want to stay in the EU. Very few want to leave the EU with no agreement. One of the key issues is the border between Ireland and Northern Ireland. Most British politicians do not want a hard border with checkpoints. This has the danger of reopening old wounds in Northern Ireland. It also presents economic hardships by disrupting supply chains. The crux of the matter is how do you keep an open border, while imposing trade tariffs and restrictions? May’s proposal solved this by agreeing to free trade, largely within the parameters of the EU’s legal framework. But, this is precisely what the hard Brexiters object to.

The March 29th deadline is approaching rapidly and the Europeans are holding firm. They are unwilling to renegotiate. Meanwhile Parliament insists that Britain not leave the EU without an agreement.

This much is what we know. What will actually happen can only be speculation, but here is my take on this. The Europeans are not going to budge. Britain does not want to leave without an agreement, save a few extremist Brexiters. Meanwhile, public support for Brexit is weakening. So, the most likely outcome will be to return to the original agreement between May and the EU, perhaps with some inconsequential changes to save face.

Two other scenarios cannot be ruled out. First, there is a growing opposition among the British people and within Parliament (by the so called back benchers, or those members who do not hold governmental office nor are leaders in the opposition party) to scrap Brexit all together and stay within the European Union. Second, the die hards in Parliament may play out the brinkmanship politics until the bitter end, resulting in Britain “crashing out of Europe” without a plan. This would cause great hardship for both Britain and to a lesser extent, Europe, so a last minute deal or a quick repair after the deadline may ensue, but no one really knows. However, as of yesterday, February 26, 2019, it appears that Prime Minister May is herding lawmakers away from the extremes such as a No Deal Brexit outcome.

The greatest impact of Brexit will be faced by the British, the Irish and the rest of Europe. However, given the size of the British and European economies, the impact will also be felt globally, though to a lesser extent. Our measures focus on the potential impact to the U.S. economy and housing market.

Gross Domestic Product

The impact on the U.S. economy of various Brexit scenarios will be transmitted through two paths. First, instability resulting from well established trade patterns will cause a loss of confidence among world businesses and consumers, particularly if one of the more extreme forms of Brexit ensues. Second, both Britain and Europe will lose the economic efficiencies of free trade and borderless transactions. Supply chains will be disrupted, particularly if goods need to pass through hard border inspections. The resulting loss of economic activity will reduce aggregate demand for goods and services not only between Britain and Europe but between them and the rest of the world. To some extent, markets have already accounted for this by dampening expectations. Put simply this means that businesses anticipating lower demand have already reduced investments and investment plans.

The growth of GDP is expected to decline as we pass over the peak in the business cycle. The Federal Reserve is increasing interest rates. Consumers who put off purchasing large ticket items, such as a home or car during the recession, have now made those purchases. Consumer and business confidence react to these along with political instability and other shocks. Without significant shocks to the economy the U.S. economy may slow through 2019 and 2020, but not go into recession. GDP growth in this case will not become negative, which is the rough definition of a recession.

Examine the first chart. Prior to 2019 we know what the economy did4, so there is a single line prior to January 2019. At the end of the first quarter of 2020, on March 29th, Britain will leave Europe, unless an extension is agreed upon. Prior to that Britain and Europe may come to agreement on an exit plan and businesses and consumers will react.

If Britain reverses and decides to stay within Europe, the impact on British and European trade and GDP will be better than what is currently expected. This will also impact the U.S. economy positively, temporarily boosting GDP above what it would have been as shown by the bright red line. At the other extreme, if Britain leaves with no agreement in place, hard borders will suddenly be erected, supply chains will be disrupted and economic growth will fall precipitously in Britain, Ireland, Europe and to a lesser extent the rest of the world. The impact of No Deal on U.S. GDP is shown by the pink line. GDP in all scenarios will level off in 2020 because of the business cycle. However, under the most severe scenarios, GDP will level off at a lower level. Note that GDP under all of the scenarios will continue to grow, but only slightly. Any additional shock from other risk factors could push GDP into negative territory and possibly a mild recession.

GDP Level

Median Household Income

The impact on U.S. median household income will be minimal with continued growth of 5.6 percent over the two year period 2019 – 2020 anticipated in the best-case No Brexit scenario and 4.9 percent in the worst case No Deal Brexit.

Existing Single-Family Home Sales, Condos and Coops

The impact of the softer Brexit scenarios on existing single-family home sales including condos and co-ops will be negligible, however, for the harder scenarios, there will likely be an initial decline in these sales in 2019 because of the employment impact and a loss of home buyer confidence.

Median Existing Single-Family Home Sales Price

The impact on median sales price for existing will be minimal as shown in the chart. The same is true for new home sale prices.

Mortgage Rate

The impact of the softer varieties of Brexit on 30 year fixed rate mortgages will be minimal. The Federal Reserve will likely react very little, if at all, to these scenarios. In contrast, it will likely react decisively to Hard Brexit or No Deal in order to protect the U.S. economy and this is likely to be reflected in mortgage rates that are as much as 0.50 percentage points lower than currently projected for 2020. The current projection assumes a deal similar to Teresa May’s Plan A. These lower rates in the aftermath of a harder Brexit help buoy home sales and starts and minimize Brexit’s impact on the housing market. By 2023 the impact on rates of the range of scenarios will converge, when the implemented Brexit becomes the new normal.

Housing Construction Starts

The impact of Brexit, regardless of the variety, will be minimal on the total of single and multi-family housing construction starts.

This is true for most of the charts below. In the case of GDP, fourth quarter figures had not been released by the publication date. However, we have a pretty good idea of its performance and we are not yet considering the divergent impact of Brexit scenarios, because that path has not yet been chosen.↩

The faces behind home sales are changing quickly, and while the Hannahs and Austins still have a long way to go to catch up with the Michaels and Johns, they are closing the gap. Buyer data on home sales for the first nine months of the year not only reveals a fun mosaic of names participating in today’s housing market, but also a sneak preview into key emerging trends. The analysis, while limited in interpretation, uncovers a story of sales increasingly skewing toward three key demographics: Millennials, Women, and Hispanics. Names associated with these groups are taking a larger share of all sales, and rapidly changing the landscape of the U.S. housing market. If these buyers can continue breaking through the affordability barrier, we should expect them to emerge further in 2019 and dominate the market in the years to come. Learn more about the methodology here.

Highlights

Hannah, Austin, Alexis, Logan, and Taylor were the top five homebuyer names with the fastest levels of sales growth in 2018, with all seeing 19-23 percent increases over last year. Michael, John, David, James, and Robert were the top five names by sales volume, but all saw 3-5 percent declines over last year.

Sales with Millennial names increased while sales with Boomer names decreased, up 5.3 and down 2.0 percent year-over-year on average respectively. The top 20 fastest growing names were associated with populations peaking in the 1980’s and 1990’s.

Sales with female names increased while sales with male names declined, up 1.6 percent and down 0.1 percent year-over-year on average respectively. Three of the top five, and 10 of the top 20 fastest growing names were predominantly female.

Sales with Hispanic names increased while sales with non-Hispanic names remained virtually flat, up 4.1 and down 0.1 percent year-over-year on average. One in four of the top 100 fastest growing names are traditionally of Hispanic origin.

These Buyer Names Are Closing the Gap

A whopping 150,000 distinct first names appear on titles of residential properties acquired this year, a testament to the plurality of the country, yet just over 2,300 names account for 86 percent of all transactions. Narrowing the list down even further, 411 names with at least 1,300 namesakes buy a home during the analyzed period account for 68 percent of all non-corporate residential sales. This analysis focuses on that core set of buyer names.

In 2018, Hannah, Austin, Alexis, Logan, and Taylor were the top five names with the fastest levels of sales growth. Nationally, home sales have begun to moderate and 2018 should end at least 2 percent below 2017 levels, but these buyers are bucking that trend. The number of homes sold to buyers with these top five names increased 19-23 percent over last year. For each of the top 20 names, sales were up at least 10 percent over last year too. Volume wise, these names are still dwarfed by others, but as the trend continues, we can expect names them to expand their home ownership footprint in 2019 and beyond.

Younger and Older Millennials Coming of Age

Under 35 ownership reached an estimated 36.8 percent in Q3 of 2018, statistically higher than a year earlier, and very likely the highest in five years, according to the latest Census Bureau report on residential vacancies and home ownership. The jump can be seen as a testament to millennials’ resilience against an unaffordable market. By choice or necessity, younger buyers continue to expand their footprint in the market, despite buying costs reaching decade highs and rising above 20-year averages.

While imperfect, joining data on name demographics from the Social Security Administration to deed record buyer information provides hints into how younger age groups are expanding their influence in the housing market. The SSA provides population counts by year of birth and first name. The frequencies can be used to estimate a peak year for each name, which can then be used to map names to their likely generation. For example, the SSA data shows half of Hannahs were born before 1993, and 80 percent of them between 1987 and 1997, thus giving Hannah a high likelihood of being a Millennial buyer. Millennial names are identified as those peaking between 1981 and 1997, Gen-X names between 1965 and 1980, Boomer names between 1946 and 1964 and Silent names before 1946.

In 2018, sales with Millennial and GenX names increased 5.3 and 0.8 percent year-over-year on average respectively, while sales with Boomer and Silent generation names decreased 2.0 and 3.5 percent year-over-year on average respectively.

The year of birth for all five fastest growing primary buyer names peaks in the early 90’s, with an estimated median year of 1993. While volume wise these younger millennials still trail their older millennial counter parts like Ryan, Joshua and Justin, their role in home purchases is expanding quickly. In fact, all but one of the top 20 fastest growing names peak anywhere between the 80’s or 90’s, with an estimated median year of 1989. The only exception is Victoria, a timeless name with two generational peaks, one in the 1950’s and a more recent resurgence in the early 90’s. Given the distributions, and traditional age of home ownership, most of these buyers are likely to be in the older side of the estimate, but it also means they have yet to peak. The trend doesn’t stop there; in the top 100 names, the median birth year still lands in the 80’s, 1982 to be exact. Perhaps unsurprisingly, the pattern of growth is a direct reflection of population growth as millennials continue to take a bigger slice of the pie through sheer numbers.

Looking at their geographic footprint in the larger states, Millennial buyer names are particularly over-represented in Kansas, Indiana, Louisiana, Missouri and Utah. These five states also happen to ho me to markets where housing affordability remains above national levels, confirming that jobs and availability of entry level homes act as a magnet to young buyers.

Women are transforming the landscape of home purchases

Single women are one of the fastest growing demographics in the housing market. In 2018, the NAR estimates 18 percent of home purchases will come from single women households, more than double the share of single men at just 7 percent. While older baby boomer and silent generation women are driving the trend, the pattern holds across all age brackets including the under 35 segment. The trend in the younger age groups is likely a reflection of women’s leaps in higher education and continued emergence in the workforce. The 2018 deed data also supports women’s tangible impact on home ownership. Sales associated with female buyer names increased while sales with male names declined, up 1.6 percent and down 0.1 percent year-over-year on average respectively. Interestingly, 64 percent of properties registered under with a female buyer name are under a single name, compared to 46 percent in the broader sample. Single women in home ownership and women as head of households and this appears to be reflected in property titles this year.

The pattern of growth is visible when comparing across genders within the Millennial generation. Looking solely at names with a peak year between 1981 and 1997, home sales with female names increased faster than males, up 6.9 and 4.4 percent on average year-over-year respectively. Also, seven of the top 10 fastest growing buyer names are predominantly Millennial female names, and all of them peak in the 80’s and 90’s.

Hispanic influence in housing continues to grow

Hispanics are the only demographic to have increased their rate of homeownership for the last three consecutive years, according to the latest 2017 Hispanic Wealth Report, which looks at Census estimates of owner-occupied homes. If deed names are an indication, this trend continued this year. Sales associated with what are traditionally Hispanic names increased while sales with non-Hispanic names remained virtually flat, up 4.1 and down 0.1 percent year-over-year on average.

While Hispanics are particularly diverse and hard to track by name and ethnicity, looking at names of Spanish origin tells a tale of an increased footprint. Notably, 26 of the top 100 fastest growing names are traditionally of Hispanic origin, and only one appears in the bottom 100. Within the top 100, Hispanic buyer names skew slightly older than their non-Hispanic counter parts, with a median birth year of 1979 and 1982 respectively. In the full set of 411 names, 40 percent of properties registered under a Hispanic buyer name are also under a single name, compared to 46 percent in the broader sample. This could be a slight hint that the multi-generational approach home buying is still key for parts of the Hispanic population in the U.S.

Looking at the geographic footprint, Hispanic buyer names are naturally over-represented in the south and southwest, with California, Texas, Nevada, New Mexico, Arizona among the top states. Given the proximity to Central America and the high density of populations of Central American origin, this is not surprising. Over on the east coast, sales to Hispanic names are also over-represented in Florida, Illinois and New Jersey, where demand for homes from domestic and international buyers of South American and Caribbean origin tends to be concentrated.

Methodology/Caveats

The analysis looks at all arms-length, residential non-corporate transactions for the January through September period in 2018. Sales for 2017 are also analyzed to enable year-over-year comparisons. Buyer names are identified by parsing the first name from the primary name on the deed record at the time of the transfer of ownership. Middle names and last names are not parsed. In cases when the deed has more than one buyer name recorded, the information is used to identify multi-name deeds but non-primary names are not parsed. Some limitations include home buyers not always going by their first name and not all names listed as primary are necessarily being heads of the household.

Residential: Sales of property types deemed non-residential are excluded, including sales of land, mobile and multifamily properties. Arms-length: non arms-length deeds, that is when the buyer and seller are not deemed to act in their own self-interest, are excluded. The most common example are sales between friends or family members. Read more about arms-length here. Non-corporate: Many older, married, and more affluent buyers purchase properties via family trusts and limited liability companies. These transactions are also excluded. All information analyzed was kept non-identifiable, that is deeds were solely aggregated by buyer first name, sale date and property physical state.

Buyer names on home sales are just one piece in tracking home ownership. Populations with growing populations may see a bigger share sales over time while home ownership may grow, decline or remain stable. penetration given not comparing population to sales. Only sales participation.

Sources

Deed records from the realtor.com residential home sales database.

Social Security Administration data on names and birth year: total frequency by legal first name for each year. Included names between 1920 and 1997. Used to estimate name peak years and generation.

Gender neutral names and gender likelihood: uses files publicly available on data.world to identify predominantly female or male names. Based on probability that a person with that given name has that predicted gender calculated by ‘number of people with predicted gender’/’total number of people with name’.

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You may wonder how well the top performing areas of the country will outshine the national average in our 2019 housing market forecast and what contributes to or drives this performance. This article addresses both of these questions, and follows up with an in-depth examination of how these operate in each of the top ten metropolitan areas.

Before proceeding, you should note that we determined the top ten areas by summing their sales and price growth forecast for 2019. To make it to the top ten, some are expected to have spectacular sales growth, others spectacular price growth, while still others are expected to have spectacular balanced growth.

How outstanding are these metro areas?

Both existing home sales and median sales price in each of these areas will grow at rates considerably above the national rate. Nationally, we expect sales to drop 2.0 percent, while on average we expect, the top 10 metro areas’ sales will increase by 4.0 percent. Nationally, we expect prices to rise by 2.2 percent, while on average we expect, the top 10 metro areas’ prices will increase 5.6 percent. We could describe how much they stand out, but a picture is worth a thousand words. Take a look at the bar chart. While sales will fall two percent at the national level, they will be growing one to eight percent in the top metros. Prices will grow two percent nationally, while they will grow three to four times as much in some of the metros.

What causes a metro area’s housing market to outperform the national average?

Several factors are common to most of the top 10, which create the conditions for particular markets to outperform the national average. On the demand side, these include, a growing economy measured in growing employment and income, growing population due to either in-migration or natural growth, and a high proportion of young couples at the stage of life of starting and growing families.

On the supply side these include affordable housing, available land, labor and capital for building new homes and an older population looking to downsize, move to senior facilities, move in with their children or have passed away leaving a home for their children to sell.

Growing economy– All but one of the top 10 metros is expected to have employment growth in 2019 in excess of the national average with an average of 2.1 percent for the top markets vs 1.3 percent nationally. Only half of the top 10 metros are expected to have income growth in 2019 in excess of the national average, however, the average for the top 10 (3.83 percent) is higher than the national average of 3.55 percent.

Growing population – Almost all of the top 10 metro area populations are growing faster than the nation. Only Boston, is not growing as fast as the national average. On average, the top 10 are growing 2.0 percent compared to 0.65 for the nation as a whole.

A growing young and Millennial population– A high proportion of the population that is at the right stage of life, with money, stability and the incentive of a growing family will be looking for a home to buy. For the most part, these are Millennials. This younger demographic is a net demander of housing, assuming they have the income, savings and stability to take the leap into homeownership. Millennials are expected to make up 45 percent of purchasers with a mortgage nationwide. As a proxy for Millennials, those aged 25 to 34 made up more than forty percent of recent mortgage purchasers in 4 of the markets projected to do well in 2019 and additional potential is there as Millennials age. Looking ahead, these markets are expected to see the population aged 35-44 grow by more than 5 percent over the next five years compared with 3.9 percent growth for the U.S. as a whole in this age group.

Metro Area

Percent Millennial

Lakeland-Winter Haven, FL

32.0

Grand Rapids-Wyoming, MI

48.8

El Paso, TX

45.7

Chattanooga, TN-GA

43.9

Phoenix-Mesa-Scottsdale, AZ

31.9

Bridgeport-Stamford-Norwalk, CT

33.8

Las Vegas-Henderson-Paradise, NV

30.0

Boise City, ID

32.4

Miami-Fort Lauderdale-West Palm Beach, FL

29.9

Boston-Cambridge-Newton, MA-NH

41.8

Milwaukee-Waukesha-West Allis, WI

45.8

a Note, the Millennial generation is currently 22 to 37 years old. These data reflect 18 – 34 year olds.

Growing new home construction – In a growing population, the existing housing stock, by definition, is not enough to satisfy the demand for housing in the long run. New homes must be constructed to accommodate a growing number of households and to replace homes destroyed by natural disasters and dilapidation. Builders can supply these new homes more easily in markets with readily available land, construction labor and capital to finance their operations. Most, but not all, of the top 10 markets have readily available land to build on. Eight of the top 10 are expected to see construction employment grow faster than the national average in 2019. The top 10 markets should have a 5.9 percent growth in construction labor compared to 4.1 for the nation as a whole.

On the supply side, this means that households, at the right stage of life, will be putting their home on the market either because they are looking for a larger home, are moving to another part of the country or are downsizing after becoming empty nesters. The older demographic is a net supplier of housing. They may move in with their children, head for a senior home or die off.

When young people are buying their first home and older people are selling their last home in an area with no population growth or in or out migration, sales increase but not the total supply of homes on the market. For each starter home supplied to the market a larger home is taken off the market. With a constant population, first time buyers will roughly equal sellers at the other end of life. In growing markets, people are migrating from other parts of the country because of employment or other attractions. Buyers will exceed sellers and the inventory of homes on the market will decline, unless there is a robust new home construction industry. In declining markets, people are moving away and sellers will exceed buyers. Inventory will build and prices will fall. In some markets, particular demographics (growing number of young couples starting families and looking for a home or a large aging population and selling a home) will affect this balance.

Of course, population is not constant. It grows at a steady pace of about two-thirds of a percent each year in the nation as a whole. New homes must be constructed to supply this growing population. Add to this, a small percentage of homes, which need to be replaced each year because of damage from storms, fires or simply dilapidation.

The top ten markets are attracting new households to their areas, because of economic opportunities, such as affordable housing combined with employment and income opportunities. Many also offer local amenities like warm climate, or natural attractions, such as mountains, the sea or lakes. Others offer cultural benefits found in large urban areas. Some of the top ten are also shedding households because of the high costs of living, especially homes.

An attraction to many of the areas is affordability. But this will be temporary if builders cannot keep up with the in-migration of households. Their ability to do so is dependent on the availability and price of land, the availability of skilled construction labor and for small builders the availability of small business loans to finance their construction projects.

The table below summarizes key indicators determining the potential for a growing housing market. These are the national figures. As you read the profile for each metro area, you may want to compare their figures against the national figures to get a sense of how much stronger the demand or supply component is than the national average.

indicator

growth

Existing Single Family Home Sales

-2.00

Existing Single Family Median Home Price

2.20

Employment

1.32

Median Household Income

3.55

Gross Domestic Product

5.53

Households

1.14

Housing Starts

8.00

Unemployment Rate

3.36

Civilian Labor Force

0.78

Population

0.65

Construction Employment

4.14

Lakeland-Winter Haven, Florida

The Lakeland-Winter Haven, Florida area, our number one forecasted housing market, has ideal conditions for a strong, rapidly growing housing market. Plentiful employment opportunities are evident by the greater than 3 percent growth in employment in recent years, which is expected to slow a bit to 2.3 percent growth in 2019. Meanwhile, median household income grew at 3.6 percent in 2017, but is expected to top 4.7 percent in 2019. The local economy, which grew 3 to 4 percent in recent years is expected to hit 4.9 percent in 2019. This strong employment and income outlook is coupled with affordability in housing with median home prices of only $138,000 in 2017 and $162,000 expected in 2019.

These strong economic opportunities are matched by the amenities of warm weather and numerous lakes scattered throughout the area. I guess that is why it is known as Winter Haven and Lakeland! The result of the sweet economics and great amenities is growing in migration. The number of households grew 2.5 percent in 2017, but is expected to top 2.6 percent in 2019.

The one downside is declining affordability with 7.4 percent price appreciation expected in 2019. Housing starts, which approached 30 percent in 2017 will still be a less feverish 7 percent in 2019. Construction labor has been growing 5 to 8 percent a year since 2015 and is expected to top 6 percent in 2019. So, if you are foot lose and fancy-free, get it while it is still hot … and if it is too hot, take a dip in one of the area’s numerous lakes.

Grand Rapids-Wyoming, Michigan

The second hottest housing market for 2019 is expected to be the Grand Rapids-Wyoming, Michigan metro area. The local economy was growing 4.2 percent in 2017, but is expected to heat up, growing 5.8 percent in 2019. This will, of course, generate employment growth, which we expect to be 2.3 percent in 2019 up from 1.4 percent growth in 2017. More importantly, median household income grew at a feverish 6.2 percent in 2016 and is still expected to grow at 2.8 percent in 2019.

A downside, for buyers, has been rapid price appreciation in recent years. This is expected to be 8.2 percent in 2019. A contributing factor in this appreciation was a slow down in new home construction. Growth in housing starts slid from 15.9 percent in 2016 to 8.0 percent in 2017 and -4.4 percent in 2018. Fortunately, it is expected to rebound to 19.3 percent in 2019, so 2020 price appreciation should cool down.

One of the attractions to the area contributing to the strong housing market is inexpensive housing and plentiful land to build on. Median home prices were $157,000 in 2017, but are expected to climb to $187,000 in 2019.

Grand Rapids-Wyoming metro area’s growth is a recent change. Prior to the recession, the economy struggled to tread water. The 2000 employment level was never surpassed prior to the recession. But in the recovery, the area took off with strong employment and income growth. In contrast, Lakeland-Winter Haven’s post recession economic growth has been slower, but is a continuation of strong pre-recession growth. One contributing factor for the Grand Rapids area, compared to Lakeland-Winter Haven was strong support for small businesses by area bankers. Small business loans (under $1m) fell to half the 2000 level during the recession in Lakeland-Winter Haven and barely surpassed the 2000 mark by 2016. In Grand Rapids-Wyoming metro, small business loans fell no where close to the 2000 level in the trough of the recession and then climbed during the recovery.

El Paso, TX

El Paso comes in third with the highest expected sales, but the slowest price growth of the top 10. Demand is high with employment expected to grow 2.2 percent in 2019 and income expected to grow 3.4 percent and a laborforce expected to grow almost twice the national average in 2019.

The key to understanding how it gains the hottest sales yet coolest prices of the ten is two-fold. Prices will be constrained by growing inventory (number of homes on the market), robust new construction spurred on by plentiful land and a steadily growing supply of construction labor. Meanwhile sales, unlike much of the rest of the country, only started growing rapidly in 2016.

Chattanooga, TN-GA

Chattanooga comes in fourth with balance high sales (5.2 percent) and price (4.3 percent) growth. Employment (1.2 percent) and income (3.3 percent) growth expected for 2019 are both slightly under the national average. However, the Chattanooga economy is growing at about 6 percent a year and is expected to have one of the lowest median price levels for homes of the top 10. Holding the Chattanooga area housing market back is a slight net out-migration of people leaving the area.

Since the recovery began, the area has experienced steady sales and price growth. In recent years, the growth rate of new construction has slowed from 14 percent in 2016 to -1 percent in 2018 and is expected to drop further in 2019. This will contribute to price growth.

Phoenix-Mesa-Scottsdale, AZ

The Phoenix area comes in fifth with stronger price (5.6 percent) growth than sales growth (3.6 percent). Employment is expected to grow (2.8 percent) twice the national average, while income (3.4 percent) growth is expected slightly under the national average in 2019. The local economy is expected to grow at a booming 7.2 percent, fueled by strong laborforce and population growth. Population growth (2.1 percent) and laborforce (2.1 percent) growth are expected to be strong in 2019. In 2018, net in migration picked up, but is expected to slow a bit in 2019, while remaining positive.

Median home prices are considerably higher than the top four metro areas, but affordability is relative to income, which is considerably higher than in Lakeland, El Paso, and Chattanooga. It is on a par with Grand Rapids. Strong price growth is expected in 2019 because 2017 and 2018 saw a rapidly dropping number of homes on the market (inventory) of 8 to 9 percent a year. Fortunately, we expect inventory to turn up slightly in 2019 in Phoenix. Housing starts increased a robust 10 to 13 percent over the last three years and we expect new construction to pick up from these levels in 2019.

Bridgeport-Stamford-Norwalk, CT

The Bridgeport area comes in sixth with 5 percent sales growth and 4 percent price growth expected in 2019. Employment (3.9 percent) and income (3.6 percent) growth are both expected to be robust in 2019. Despite this, the area will likely continue its pattern of modest out migration.

One advantage that the Bridgeport area has, is that it stands out for long-term income growth, which has been growing considerably more rapidly than employment growth, since prior to the recession. It took a dip during the recession, but continued a steady upward path during the recovery. Another advantage that it has are the amenities of being close to New York City for employment and cultural opportunities and Long Island Sound for swimming and boating enjoyment.

We cannot claim that people are streaming into the area for inexpensive homes. The median home price is $462 thousand, second to Boston’s $497 thousand among the top 10. However, given that median household incomes are the highest amongst the top 10, many people can more readily afford these prices. Income is expected to top $102 thousand in 2019.

Las Vegas-Henderson-Paradise, NV

The Las Vegas area comes in at seventh with the lowest sales growth (0.9 percent) and second highest price growth (7.9 percent) of the top 10. The robust economy, expected to grow 8 percent in 2019 is generating strong employment growth of 3.3 percent, laborforce growth of 2.2 percent and income growth of 3.9 percent expected in 2019.

The area does not provide the cheapest housing among the top 10 with a median home price of $278 thousand expected in 2019, however, household incomes of $61 thousand are commensurate. One reason that price growth is expected to be so high is that the growth rate of new construction (housing starts) slowed in 2018 to about 1.7 percent from 12 to 14 percent in the previous two years. 2019 should see housing starts rebound to previous levels or higher. Another reason for high price growth experienced in the last few years and expected in 2019 is relatively limited land. The area is bounded by national parks and natural boundaries.

Boise City, ID

The Boise area comes in at eighth and similar to Las Vegas, will have relatively low sales growth of 1.5 percent and high price growth of 6.9 percent expected in 2019. It has a robust economy expected to grow over 7 percent in 2019, generating employment growth of 2.1 percent and income growth of 3.4 percent. The population and laborforce are growing rapidly with the laborforce growing over 3 percent in recent years, but expected to slow to 2 percent in 2019. Similarly, population has been growing at about 2.5 percent in the last few years, but will slow to under 2 percent in 2019.

Home prices ($258 thousand) are expected to be almost as high, as in Las Vegas, but so too are median household incomes ($59 thousand). Throughout the economic recovery, sales in the Boise area have steadily grown until recent years. During the recession, throughout the country, there was an unmet need for housing as couples formed and families grew, while their incomes and job stability plummeted. This resulted in a pent up demand for housing that has been satisfied during the recovery. In the Boise area, unlike many other areas, sales growth recovered soon and steadily grew throughout the recession.

Miami-Fort Lauderdale-West Palm Beach, FL

The Miami area comes in ninth with 3.3 percent sales growth and 5.0 percent price growth expected in 2019. The local economy is expected to grow at a robust 6 percent, resulting in 2.4 percent employment growth, a whopping 5.9 percent income growth and an unemployment rate falling below 3 percent. Adding to these demand factors is an expected slight in migration.

Median home prices ($267 thousand) are in line with Boise and Las Vegas, but so too are incomes ($59 thousand). Throughout the recovery, Miami has experienced high price growth and stagnant sales growth. The unavailability of developable land in the Miami area, which is bounded by the sea to the East and the Everglades to the West, contributes to steadily growing prices since the recovery began. Another factor affecting price growth has been declining housing starts in 2016 and 2017, which turned around slightly in 2018. We expect a considerable increase in new home construction in 2019, however, this will likely relieve price growth only by 2020.

Boston-Cambridge-Newton, MA-NH

The Boston area comes in tenth with 3.6 percent sales and 4.6 percent price growth expected in 2019. A robust local economy expected to top 5 percent drives this performance in Boston just as for other top-ten markets. Employment should grow 2.4 percent and income 3.9 percent. A lower unemployment rate, expected to drop to 2.9 percent, will contribute to strong consumer confidence. The laborforce is expected to grow more than 2 percent, however population growth is expected to be a mere 0.5 percent, which is lower than the national average. Laborforce growth in excess of population growth can come from a growing working age population relative to other age groups and by drawing discouraged and other marginal workers back into the laborforce. Similar to the Bridgeport area, Boston’s income growth has exceeded its employment growth considerably since before the recession with a slight dip during the depths of the recession.

Similar to Miami, the Boston area too has a hard constraint on the availability of land. However, the constraint is only on one side – the sea. New construction in recent years has been variable. Housing starts grew 17 percent in 2016, fell 2 percent in 2017 and recovered slightly by 1 percent in 2018. We expect starts to grow considerably in 2019. However, this will likely relieve price growth only by 2020.

The 2019 housing market will see modest inventory gains, but with mortgage rates expected to hit 5.5 percent by the end of the year, monthly mortgage payments will rise 8 percent putting home ownership more out of reach especially for younger Gen-Z, Millennial, and other first-time home buyers. Upscale homes in high-growth markets, however, will provide more opportunities for buyers.

Forecast Highlights

Home price growth will continue to slow, with a forecasted increase of 2.2 percent

Inventory increases will remain moderate with less than a 7 percent increase

High-priced markets will buck the trend, with double-digit inventory gains

Millennials will account for 45 percent of mortgages in 2019 vs. 17 percent for Boomers

New tax plan will be good for renters, mixed for homeowners

Realtor.com® Forecast for Key Housing Indicators

Housing Indicator

Realtor.com 2019 Forecast

Mortgage Rates

Average 5.3% throughout the year, reaching 5.5% (30 year fixed) by year end

Existing Home Median Price Appreciation

Up 2.2%

Existing Home Sales

Down 2%

Single-Family Home Housing Starts

Up 8%

Homeownership Rate

64.6%

Inventory will continue to increase next year, but unless there is a major shift in the economic trajectory, we don’t expect a buyer’s market on the horizon within the next five years. Unfortunately for buyers, it’s only going to get more costly to buy in 2019, especially the most-demanded entry level real estate. To be successful, buyers should think through how they’ll adapt to higher rates and prices.

What will 2019 be like for buyers?

Buying a home will be an even more expensive undertaking in 2019 as mortgage rates and home prices increase. Buyers who are able to stay in the market will find less competition as more buyers are priced out, but feel an increased sense of urgency to close before it gets even more expensive. Their largest struggle next year will be reconciling wants, needs and budget versus the heavy competition of 2018. Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory is focused in the mid-to higher-end price tier, not entry-level. Rising mortgage rates and prices will keep a lot of new inventory out of their budget and make it especially tough for first time home buyers.

What will 2019 be like for sellers?

Although it remains a seller’s market, sellers will need to be mindful of their increasing competition and shouldn’t necessarily expect to name their price and get it in full — a change from the past few years. Above-median priced sellers, may find it will take longer to sell and require offering incentives, such as price cuts or other offerings. With less demand in the market, there will be fewer bidding wars and multiple offers. However, with inventory expected to remain limited in most markets, sellers who price competitively can still walk away with a handsome amount of profit, but not the price jumps observed in previous years.

Four Housing Trends in 2019

1) Modest inventory gains continue; high-end inventory growth spreads

Inventory hit the lowest level in recorded history last winter, but finally bottomed out and reached positive territory in October. National inventory increases will remain low in 2019 at less than 7 percent. In the majority of markets, the number of homes being put on the market or newly constructed has increased slightly, while the pace of sales has slowed slightly, which has helped stop the inventory decline. But the inventory increases or slowing price increases necessary for a more widespread sales gain are not forecasted to happen in 2019. While the situation is not getting worse for buyers, it’s also not improving notably in the majority of markets.

High-priced markets are a different story. The majority of the inventory gains have been in upscale homes in high-growth markets, which suggests higher prices are incentivizing sellers. Next year, realtor.com® forecasts more high-end inventory growth in major metros with the largest increases expected in: San Jose-Sunnyvale-Santa Clara, Calif.; Seattle-Tacoma- Bellevue, Wash.; Worcester, Mass.-Conn.; Boston-Cambridge-Newton, Mass.-N.H.; and Nashville-Davidson– Murfreesboro–Franklin, Tenn. all of which could see double digit gains in inventory in 2019.

2) Soft home sales continue

After the best sales year in a decade in 2017, home sales are on track for a mild year-over-year decline in 2018, which is likely to extend into 2019 with a 2.0 percent decline. Although long-term desire to own a home remains strong, especially among younger Gen-z and millennials, the market challenges that make owning a home difficult continue to keep out first-time buyers, locking them out not only of their home, but also of the wealth by equity generation that owning provides.

3) Millennials purchase the most homes

Millennials will continue to make up the largest segment of buyers next year, accounting for 45 percent of mortgages, compared to 17 percent of Boomers, and 37 percent of Gen Xers. While first-time buyers will struggle next year, older millennial move-up buyers will have more options in the mid-to upper-tier price point and will make up the majority of millennials who close in 2019. Looking forward, 2020 is expected to be the peak millennial home buying year with the largest cohort of millennials turning 30 years old. Millennials are also likely to make up the largest share of home buyers for the next decade as their housing needs adjust over time.

4) Tax plan remains a wild card for housing

In April 2019, taxpayers will go through the income tax process for the first time since the new tax plan. For most renters, the results will be good: lower rates and a higher standard deduction should amount to lower tax bills. For homeowners, it’s a mixed bag. Some will benefit from lower rates and a higher standard deduction, but many others will find limited itemized deductions and personal exemptions mean a higher tax bill. Despite the fact that 2017 home sales were the highest they’ve been in over a decade, sales in 2018 started to decline immediately following the tax plan. While many factors influence home sales, it could be the case that without homeownership incentives some renters are holding off on buying. How the market will react in 2019 remains a wildcard for housing.

Home Price Cuts Increase and Price Gains Ease in August as Sellers Begin to Adjust Expectations – But Housing Market Still Far from Balanced

Highlights

Frequency of price cuts grew nationwide and in 39 of the 45 largest markets over last year, with largest increases in Seattle, San Jose, San Diego

The U.S. median listing price dropped $4,000 or 1.3 percent, the second largest monthly drop since August 2015, while 34 of the 45 largest markets in the country saw slower growth in prices compared to last August

The last week of August saw the first national year-over-year increase in inventory in four years, while listings in the 45 largest markets combined grew 2.4 percent year-over-year on average

Price Cuts on the Rise

According to the latest realtor.com inventory data, the national share of home price cuts reached 19.1 percent in August, up from 17.6 percent last year and 13.1 percent in 2012, hinting that more home sellers are beginning to react to buyer fatigue and adjust expectations. The rise in the proportion of price reductions was more pronounced in larger and pricier markets, with 39 of the 45 largest markets seeing an increase in the percentage of price cuts over last year. Also, the combined median list price in the top 10 markets with the biggest jumps in the price cut share was visibly higher compared to the top 10 markets with the smallest jumps in the price cut share, $500,000 and $278,000 respectively.

Additionally, the increase in price cuts is visibly more prevalent in markets that have seen inventory growth. Inventory in the top 10 markets with the biggest jumps in the price cut share was up 19 percent year-over-year on average. In contrast, inventory the top 10 markets with the smallest jumps in the price cut share were down 5 percent year-over-year on average.

The median price cut share in the 45 markets analyzed was 22 percent, up from 20 percent last August, and 15 percent in August 2013. Also, an additional seven markets are now seeing price cuts on over 20 percent of listings compared to last August. Historically, the share of price cuts tends to peak during July-October as the summer buying season winds down and more unsold inventory gets price-adjusted. Considering over 40 percent of price cuts tend to occur during these four months so we should expect the pattern of increased volume and share of price reductions to hold going into the fall in most markets.

The rise in price cuts is also more pronounced in the pricier tiers. While markets of all price levels have seen jumps in price cuts, the biggest jump in both volume and share of price cuts has emerged in the $350,000<750,000 price range, with an additional 17,000 listings seeing price decreases compared to last year, taking the total to 117,000 or 25% of all listings in this tier, accelerating from 23 percent last year and 19 percent in 2014.

Price Gains Continue to Ease

This month, the U.S. median asking price grew 7 percent year-over-year, decelerating from 10 percent last August. In the largest markets, the deceleration in price gains is more pronounced. The average yearly growth in median list prices in the 45 largest markets combined was 6 percent, down from 8 percent this time last year. Also 34 of the 45 markets saw slower price growth compared to last year, and only 5 of the 45 markets saw double-digit price gains compared to 16 markets last August. If this pattern continues, we should expect more markets to see moderated price growth in the fall, but in dollar terms buyers should still expect prices to be higher than last year.

Inventory Continues to Stabilize

The rise in price cuts is consistent with the continued shift toward inventory recovery. As predicted in the2018 realtor.com® Housing Forecast, the rate of inventory decline slowed nationally, with only 2 percent fewer for-sale listings on the market than there were in August 2017. Inventory increased 2 percent over July, in line with the typical seasonal increase. Most notably, the last week of August saw the first year-over-year increase in inventory in four years. Once again, the boost to listings was in part due to approximately 488,000 new listings entering the market during August. However, this trend would need to continue for at least 24 months to truly tip the balance of the market over to buyers. Month’s supply, defined as the number of months it would take for inventory to deplete if no new listing were tossed into the market, stopped declining in June for the first time since 2014, but it remains well below the normal levels needed for a balanced market.

It’s also important to remember the pace and timing of the slowdown will vary by market, and some places may take a deeper breath than others. For starters, this trend toward inventory recovery is particularly visible in the larger cities, and there’s variability there too. Active listings in the 45 largest markets in the country combined grew 2.4 percent year-over-year on average, the first yearly increase in homes-for-sale since realtor.com started tracking in 2013. Specifically, 17 of those 45 markets should see more active listings compared this time last year. San Jose, Seattle and San Diego were the three markets with the biggest inventory jumps over last year, all posting increases of 28 percent or more. Other major markets including San Francisco, Dallas, Boston, Los Angeles and New York saw inventory rise over last year as well. In other major markets, including Miami, and Chicago, inventory was virtually flat. In contrast, Philadelphia, Milwaukee and Indianapolis were the top three markets with the biggest inventory drops over last year, all posting decreases of 11 percent or more, and all priced below the national median.

Metro Area

Price Cut Share

Price Cut Share YoY

Active Listing Count YoY

Seattle-Tacoma-Bellevue, WA

28%

8%

36%

San Jose-Sunnyvale-Santa Clara, CA

17%

7%

69%

San Diego-Carlsbad, CA

27%

5%

28%

Riverside-San Bernardino-Ontario, CA

21%

5%

12%

Indianapolis-Carmel-Anderson, IN

30%

5%

-23%

Los Angeles-Long Beach-Anaheim, CA

19%

5%

6%

Jacksonville, FL

24%

4%

10%

Nashville-Davidson–Murfreesboro–Franklin, TN

19%

3%

24%

Orlando-Kissimmee-Sanford, FL

26%

3%

-7%

Birmingham-Hoover, AL

16%

3%

-10%

San Francisco-Oakland-Hayward, CA

14%

3%

22%

Dallas-Fort Worth-Arlington, TX

30%

3%

14%

Portland-Vancouver-Hillsboro, OR-WA

28%

3%

20%

Tampa-St. Petersburg-Clearwater, FL

28%

2%

3%

Phoenix-Mesa-Scottsdale, AZ

30%

2%

-9%

Charlotte-Concord-Gastonia, NC-SC

26%

2%

-1%

Detroit-Warren-Dearborn, MI

25%

2%

2%

Boston-Cambridge-Newton, MA-NH

19%

2%

7%

Buffalo-Cheektowaga-Niagara Falls, NY

25%

2%

-3%

Raleigh, NC

19%

2%

0%

Rochester, NY

19%

2%

-1%

Miami-Fort Lauderdale-West Palm Beach, FL

15%

2%

-1%

Atlanta-Sandy Springs-Roswell, GA

22%

2%

-4%

Louisville/Jefferson County, KY-IN

23%

2%

-8%

Memphis, TN-MS-AR

19%

2%

-3%

New York-Newark-Jersey City, NY-NJ-PA

15%

2%

4%

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

22%

1%

-11%

Cleveland-Elyria, OH

21%

1%

-6%

Baltimore-Columbia-Towson, MD

22%

1%

-5%

Hartford-West Hartford-East Hartford, CT

18%

1%

0%

Virginia Beach-Norfolk-Newport News, VA-NC

20%

1%

-5%

Chicago-Naperville-Elgin, IL-IN-WI

19%

1%

-1%

Cincinnati, OH-KY-IN

25%

1%

-7%

Kansas City, MO-KS

19%

1%

8%

Washington-Arlington-Alexandria, DC-VA-MD-WV

19%

1%

-4%

Minneapolis-St. Paul-Bloomington, MN-WI

22%

0%

-7%

San Antonio-New Braunfels, TX

23%

0%

4%

Houston-The Woodlands-Sugar Land, TX

24%

0%

-2%

Richmond, VA

20%

0%

-6%

Oklahoma City, OK

27%

0%

-9%

New Orleans-Metairie, LA

21%

0%

5%

Pittsburgh, PA

18%

-1%

-8%

St. Louis, MO-IL

22%

-1%

-5%

Milwaukee-Waukesha-West Allis, WI

18%

-2%

-13%

Austin-Round Rock, TX

29%

-2%

-2%

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Salt Lake City and Denver have more in common than the fact they are big cities, near big mountains. Salt Lake City’s housing market is experiencing rapid growth patterns not too dissimilar to those that occurred in Denver in early 2015 and 2016 and that drove the city to the top of the nation’s hot housing markets.

Following the Steps of a Hot Market

The Salt Lake City metropolitan area is projected to have one of the strongest housing markets in the country in 2018, with home prices and sales expected to reach 4.5 percent and 4.6 percent growth, respectively, over last year. Just like its bigger sibling Denver, the factors driving its strength are a growing economy, relative affordability and an increasing millennial population. In fact, with home prices growing three times faster and supply moving a full week faster in the span of a year, Salt Lake City resembles Denver at the beginning of its boom.

In just a handful of years, an influx of jobs and millennials drove Denver’s housing market from strong and stable to rising like the Rockies. If the city is able to continue generating jobs and attracting well-educated young people, the market has the potential to continue to climb to ‘Mile High City’-type heights.

New Jobs and Higher Incomes Power Growth

A primary cause of Salt Lake City’s momentum is its robust economic picture and growing population. The local Salt Lake City economy (metro GDP) is growing at 9 percent year-over-year, more than two times faster than the national average. The city is also adding jobs at nearly three times the overall U.S. pace, with employment growing at 3.6 percent year-over-year. Household incomes in the area are growing at 5.4 percent year-over-year, nearly twice the rate for the country as a whole. Last year, population topped 3 million for the first time, and rapid household creation has been consistent with an uptick in demand in the market.

Despite its strong economy, Salt Lake City remains relatively affordable, particularly in comparison to other hot mid-to-large cities. The median sales price in Salt Lake City at the end of 2017 was $273,000, which is $20,000, $70,000 and $90,000 lower than other growing markets of Austin, Texas; Portland, Ore., and Denver, respectively. A median income household in Salt Lake City can buy a median-priced home with 32 percent of its annual income, roughly in-line with the generally accepted maximum.

A Millennial Beacon in the West

Market dynamics in Salt Lake City are being particularly driven by its larger-than-average, and growing, proportion of millennials. In fact, its millennial population is 1.3 times higher than the U.S. average and made up 46 percent of its mortgage applications in 2017, beating the U.S. average by 9 percent and turning into another millennial beacon in the west. Looking at realtor.com® search activity on our cross market demand report, Salt Lake City has been drawing interest from Los Angeles, Denver, Las Vegas and San Francisco, showing that it is likely absorbing unquenched millennial demand from these hot markets.

Although realtor.com® predicts that demand will be strong and constant in Salt Lake City in 2018 (it ranked 6th out of 100 metros on our 2018 Housing Forecast), the longer-term outlook for the city’s housing market depends on its ability to continue to create jobs for young professionals and drive housing market demand. If it’s successful at doing so – as Denver so far has been – then the Denver market’s current conditions provide a reasonable snapshot of what is in store for Salt Lake City.

Inventory constraints that have fueled a sharp rise in home prices and made it difficult for buyers to gain a foothold in the market will begin to ease next year as part of broad and continued market improvements.

The easing of the inventory shortage, which is expected to result in more manageable increases in home prices and a modest acceleration of home sales, is being predicted based on developments first detected by realtor.com® late this summer. The annual forecast, which is among the industry’s bellwethers in tracking and analyzing major trends in the housing market, also foresees an increase in millennial mortgages and strong sales growth in Southern markets. The wildcard in 2018 will be the impact of tax reform legislation currently being debated in Congress.

Next year will set the stage for a significant inflection point in the housing shortage. Inventory increases will be felt in higher priced segments after spring home buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond.

Realtor.com® Forecast for Key Housing Indicators

Housing Indicator

Realtor.com® 2018 Forecast

Home price appreciation

3.2% increase, enabling a sales pickup

Mortgage rate

Average 4.6% throughout the year and reach 5.0% (30 year fixed) by the end

Existing home sales

2.5% growth, low inventory trend starts to reverse

Housing starts

3% growth in home starts; 7% growth in single family home starts

New home sales

Increase 7%

Home ownership rate

Stabilize at 63.9% after bottom in Q2-2016

Five Housing Trends for 2018

Inventory expected to begin to increase – In August, the U.S. housing market began to see a higher than normal month-over-month deceleration in inventory that has continued into fall. Based on this pattern, realtor.com® projects U.S. year-over-year inventory growth to tick up into positive territory by fall 2018, for the first time since 2015. Inventory declines are expected to decelerate slowly throughout the year, reaching a 4 percent year-over-year decline in March before increasing in early fall, after the peak home-buying months. Boston; Detroit; Kansas City, Mo.; Nashville; and Philadelphia are predicted to see inventory recover first. The majority of this growth is expected in the mid-to-upper tier price points, which includes U.S. homes priced above $350,000. Recovery for starter homes is expected to take longer because their levels were significantly depleted by first time buyers.

Price appreciation expected to slow – Home prices are forecasted to slow to 3.2 percent growth year-over-year nationally, from an estimated increase of 5.5 percent in 2017. Most of the slowing will be felt in the higher-priced segment as more available inventory in this price range and a smaller pool of buyers forces sellers to price competitively. Entry-level homes will continue to see price gains due to the larger number of buyers that can afford them and more limited homes available for sale in this price range.

Millennials anticipated to gain marketshare in all home price segments – Although millennials will continue to face challenges next year with rising interest rates and home prices, they are on track to gain mortgage market share in all price points, due to the sheer size of the generation. Millennials could reach 43 percent of home buyers taking out a mortgage by the end of 2018, up from an estimated 40 percent in 2017. With the largest cohort of millennial expected to turn 30 in 2020, their homeownership market share is only expected to increase.

Millennials are a driving force in today’s housing market. They already dominate lower price home mortgage and are getting close to overtaking older generations for mid- and upper-tier mortgages. While financially secure in general, their debt to income ratios have started to increase as they compete for higher priced homes.

Southern markets predicted to lead in sales growth – Southern cities are anticipated to beat the national average in home sales growth in 2018 with Tulsa, Okla.; Little Rock, Ark.; Dallas; and Charlotte, N.C. leading the pack. Sales are expected to grow by 6 percent or more in these markets, compared with 2.5 percent nationally. The majority of this growth can be attributed to healthy building levels combating the housing shortage. With inventory growth just around the corner, these areas are primed for sales gains in years to come.

Tax reform will be a major wildcard – At the time of this forecast, both the House and Senate had bills up for consideration, but neither had passed and their impact was not included in the forecast for 2018 sales and prices. Since then, the House has passed its tax bill and the Senate bill is likely to be voted on soon. While the ultimate impact of tax reform will depend on the details of the plan that is finally adopted, both versions include provisions that are likely to decrease incentives for mobility and reduce ownership tax benefits. On the flip side, some taxpayers, including renters, are likely to see tax cuts. While more disposable income for buyers is positive for housing, the loss of tax benefits for owners could lead to fewer sales and impact prices negatively over time with the largest impact on markets with higher prices and incomes.

Next year, home prices are anticipated to increase 3.2 percent year-over-year after finishing 2017 up 5.5 percent year-over-year. Existing home sales are forecast to increase 2.5 percent to 5.60 million homes due in-part to inventory increases, compared to 2017’s 0.4 percent increase or 5.47 million homes. Mortgage rates are expected to reach 5.0 percent by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization in the year ahead.

Top 100 Largest U.S. Metros Ranked by Forecasted 2018 Sales and Price Growth

Rank

Metro

2018 Sales Growth

2018 Price Growth

1

Las Vegas-Henderson-Paradise, Nev.

4.90

6.90

2

Dallas-Fort Worth-Arlington, Texas

6.02

5.57

3

Deltona-Daytona Beach-Ormond Beach, Fla.

5.47

6.00

4

Stockton-Lodi, Calif.

4.55

6.43

5

Lakeland-Winter Haven, Fla.

3.00

7.00

6

Salt Lake City, Utah

4.62

4.50

7

Charlotte-Concord-Gastonia, N.C.-S.C.

5.98

3.02

8

Colorado Springs, Colo

3.12

5.65

9

Nashville-Davidson–Murfreesboro–Franklin, Tenn.

1.00

7.67

10

Tulsa, Okla.

7.54

1.02

11

Seattle-Tacoma-Bellevue, Wash.

2.34

6.21

12

Spokane-Spokane Valley, Wash.

3.50

4.97

13

Austin-Round Rock, Texas

4.04

4.42

14

Miami-Fort Lauderdale-West Palm Beach, Fla.

3.10

5.28

15

Little Rock-North Little Rock-Conway, Ark.

7.00

1.37

16

Denver-Aurora-Lakewood, Colo.

1.75

6.54

17

Orlando-Kissimmee-Sanford, Fla.

1.24

6.88

18

Toledo, Ohio

5.16

2.95

19

Columbia, S.C.

5.07

3.00

20

Palm Bay-Melbourne-Titusville, Fla.

1.00

7.00

21

Jacksonville, Fla.

4.73

3.20

22

Durham-Chapel Hill, N.C.

5.18

2.62

23

Providence-Warwick, R.I.-Mass.

3.72

3.97

24

Akron, Ohio

5.89

1.70

25

North Port-Sarasota-Bradenton, Fla.

3.00

4.50

26

Chattanooga, Tenn.-Ga.

3.50

4.00

27

Worcester, Mass.-Conn.

3.77

3.68

28

Raleigh, N.C.

1.63

5.77

29

Tampa-St. Petersburg-Clearwater, Fla.

1.38

6.00

30

Grand Rapids-Wyoming, Mich.

2.96

4.25

31

Boise City, Idaho

2.00

5.00

32

San Jose-Sunnyvale-Santa Clara, Calif.

2.50

4.37

33

Greenville-Anderson-Mauldin, S.C.

2.80

4.00

34

Madison, Wis.

1.72

5.05

35

Albuquerque, N.M.

2.92

3.71

36

Houston-The Woodlands-Sugar Land, Texas

2.24

4.19

37

Winston-Salem, N.C.

3.00

3.21

38

Riverside-San Bernardino-Ontario, Calif.

0.52

5.66

39

Buffalo-Cheektowaga-Niagara Falls, N.Y.

1.27

4.89

40

Fresno, Calif.

1.29

4.81

41

San Francisco-Oakland-Hayward, Calif.

0.94

5.14

42

Detroit-Warren-Dearborn, Mich.

1.17

4.77

43

Phoenix-Mesa-Scottsdale, Ariz.

3.66

2.26

44

Oxnard-Thousand Oaks-Ventura, Calif.

2.29

3.62

45

Augusta-Richmond County, Ga.-S.C.

2.50

3.34

46

Tucson, Ariz.

3.00

2.71

47

San Diego-Carlsbad, Calif.

2.51

3.19

48

Youngstown-Warren-Boardman, Ohio-Pa.

3.01

2.50

49

Harrisburg-Carlisle, Pa.

2.50

3.00

50

Cleveland-Elyria, Ohio

3.00

2.48

51

Birmingham-Hoover, Ala.

3.00

2.42

52

McAllen-Edinburg-Mission, Texas

2.38

3.00

53

Charleston-North Charleston, S.C.

3.64

1.69

54

New York-Newark-Jersey City, N.Y.-N.J.-Pa.

1.16

4.15

55

Jackson, Miss.

0.00

5.30

56

Virginia Beach-Norfolk-Newport News, Va.-N.C.

1.40

3.82

57

Boston-Cambridge-Newton, Mass.-N.H.

2.55

2.64

58

Pittsburgh, Pa.

3.53

1.62

59

Oklahoma City, Okla.

1.49

3.51

60

Portland-South Portland, Maine

5.00

0.00

61

Cape Coral-Fort Myers, Fla

1.00

3.99

62

El Paso, Texas

2.69

2.24

63

Minneapolis-St. Paul-Bloomington, Minn.-Wis.

0.00

4.93

64

Knoxville, Tenn.

2.00

2.92

65

Allentown-Bethlehem-Easton, Pa.-N.J.

4.12

0.57

66

Bakersfield, Calif.

1.00

3.61

67

Urban Honolulu, Hawaii

1.43

3.11

68

Des Moines-West Des Moines, Iowa

3.20

1.19

69

Greensboro-High Point, N.C.

1.34

2.97

70

Springfield, Mass.

1.24

3.00

71

New Orleans-Metairie, La.

2.00

2.24

72

Cincinnati, Ohio-Ky.-Ind.

1.47

2.32

73

Wichita, Ks.

2.23

1.49

74

Richmond, Va.

2.68

1.02

75

Columbus, Ohio

0.05

3.58

76

Sacramento–Roseville–Arden-Arcade, Calif.

1.00

2.61

77

Rochester, N.Y.

1.56

2.02

78

Hartford-West Hartford-East Hartford, Conn.

4.46

-1.05

79

Albany-Schenectady-Troy, N.Y.

0.75

2.55

80

Dayton, Ohio

3.01

0.19

81

Memphis, Tenn.-Miss.-Ark.

1.37

1.82

82

Scranton–Wilkes-Barre–Hazleton, Pa.

1.18

1.81

83

Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.

3.78

-1.04

84

Chicago-Naperville-Elgin, Ill.-Ind.-Wis.

0.00

2.57

85

Syracuse, N.Y.

0.00

2.57

86

Milwaukee-Waukesha-West Allis, Wis.

0.00

2.48

87

Baltimore-Columbia-Towson, Md.

0.48

1.82

88

New Haven-Milford, Conn.

2.96

-0.67

89

Washington-Arlington-Alexandria, D.C.-Va.-Md-W.V.

0.00

2.25

90

Omaha-Council Bluffs, Neb.-Iowa

0.00

2.18

91

Louisville/Jefferson County, Ky.-Ind.

-2.74

4.92

92

San Antonio-New Braunfels, Texas

0.37

1.52

93

Portland-Vancouver-Hillsboro, Ore.-Wash.

-3.48

4.98

94

Baton Rouge, La.

0.00

1.50

95

Atlanta-Sandy Springs-Roswell, Ga.

-1.88

2.99

96

Los Angeles-Long Beach-Anaheim, Calif.

-2.10

3.09

97

Indianapolis-Carmel-Anderson, Ind.

3.49

-2.53

98

Kansas City, Mo-Kan.

0.00

-0.12

99

St. Louis, Mo.-Ill.

0.00

-2.83

100

Bridgeport-Stamford-Norwalk, Conn.

-0.35

-2.87

Realtor.com’s model-based forecast uses data on the housing market and overall economy to estimate values for these variables for the year ahead. The forecast result is a projection for annual total sales increase (total 2018 existing-home sales vs. 2017) and annual median price increase (2018 median existing-home sales price vs. 2017).

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Here we review the housing markets in MONEY’s 2017 Best Places to Live, diving deep into the top 10 and providing our expert take on their housing outlook. To this end, we overlay the full set of realtor.com® housing insights, including over 40 housing metrics to get a comprehensive view current and future market conditions in their surrounding areas. Read more about MONEY’s methodology here. Read more about the full library of metrics and methodology of this review here.

Housing in This Year’s Livability Hubs

From a housing perspective, MONEY’s Top 10 Best Places to Live make for a relatively well-balanced set of markets, particularly when set against the national context. Our analysis reveals that above average projected housing growth and relative housing health in these markets should continue to attract new residents and propel housing activity in the months to come, even as housing affordability continues to shrink further.

It’s important to remember that while these livability harbors are small in size – and naturally secluded from the limelight and chaos of the big urbs – they are not completely disconnected from job hubs, and in fact benefit from economic momentum of their surrounding area and neighboring metros.

Key Market Highlights (MONEY’s Top 10 Best Places to Live)

Realtor.com dissected MONEY’s Top 10 Best Places to Live in the three key streams of housing growth, housing health and housing affordability, using proprietary realtor.com housing indices. Here are the key highlights on the places combined:

Strong economies and sustained home-buying demand point to a bright outlook and housing potential, and these markets should continue to attract new buyers and retain existing residents.

Relatively healthy housing conditions mean housing growth is likely to be rational, keeping these markets at a safe distance from the housing bubble precipice.

And while shrinking affordability will be a recurring theme for homebuyers, they should still have opportunities to invest in these very livable communities.

The number of households in these markets combined is projected to grow 7 percent in the next five years. That’s more than double the growth rate expected in the rest of the country. In fact, 8 of the 10 markets should grow faster than the US, with Collin County (Allen, TX) set to lead the pack with total households increasing by 10 percent by 2020.

Not surprisingly, the supply of homes in these growing places has been moving at an athletic pace. Earlier this summer, the median days on market in the top 10 combined was at 47 days, a full 17 days lower than the US overall. Douglas County (Lone Tree, CO) led the way with a median age of 34 days.

And these are far from becoming one hit-wonders. The pace of supply is expected to carry momentum well into next year. Our realtor.com supply forecast expects days on market to continue to drop faster than the national rate in 7 of the 10 markets. L.A. County (Monterey Park, CA) and Williamson County (Franklin, TN) are expected to see supply accelerate the fastest.

In the wider encompassing metro areas, realtor.com’s 2017 housing forecast projected sales prices and volume to grow at the same vigorous pace as the US overall, up 4.7 and 4.5 percent year-over-year respectively. L.A. County (Monterey Park, CA) was expected to lead the way, with 6.0 and 6.9 percent yearly growth respectively.

These towns lack the typical symptoms of unsustainable housing markets, and that’s perhaps part of their secret winning formula. Rapid home flipping is not inexistent (after all, these are fast-moving, desirable markets), but it’s nowhere near speculative and has followed a controlled trajectory in the last couple of years. In 2016, the share of homes flipped in these markets combined was 3.2 percent, slightly below US normal of 4.0 percent, and about half the rate observed during speculative times in the mid-2000s. Also, flipping activity was virtually flat on a yearly basis.

Foreclosure rates are also well below recessionary levels. The share of foreclosed sales in 2016 in these markets combined was a mere 3.1 percent (ranging from 1.0 to 9.0 percent), with only two of the ten showing foreclosed shares above the US normal. The other good sign is the share of foreclosures remained flat on a yearly basis.

Contributing to the balance act is the relatively healthy amount of new construction, something particularly absent in other hot markets around the country. The realtor.com ‘housing formation versus starts index’ for the 10 markets combined is 77.0, which indicates new construction in these counties is keeping up with household growth more closely than the national average. Robust home building, and availability of prime land and green spaces appear to be key assets, allowing for the horizontal expansion and smart vertical growth so desperately sought in other markets. New home construction in Hamilton County (Fishers, IN) and Williamson County (Franklin, TN) in particular seem to be delivering close to the idyllic one-to-one ratio of housing starts per new households.

While not free from the affordability woes plaguing the overall US housing market, real estate in MONEY’s Top 10 Best Places to Live provides relative value for the money, and the markets have become attractive targets due to strong job growth.

The median household in these markets needs 38 percent percent of income to purchase the typical home. While that’s above the recommended 30 percent, it’s still far from the big cities where the income requirements to buy a home average a scarier 50 percent. Three affordability jewels remain in the list, with Stark County (Dickinson, ND), Hamilton County (Fishers IN) and DeSoto County (Olive Branch MS) leading the way, all requiring below 25 percent of income to buy.

However, consistent with the national trend, housing affordability in these prime places to live continues to decrease. The change in the percentage of income required to buy is slightly lower but very comparable to the national rate, up 7.6 percent and 8.8 percent year-over-year respectively.

In the last three years, asking prices on homes have grown four times faster than household incomes in these areas. That’s not worse than the national average, but also not better. Only Williamson County (Franklin, TN) has seen incomes keep relative pace with home prices.

What’s Next for Housing in MONEY’s Best Places to Live

Besides the obvious affordability challenges plaguing the rest of the country, the best places to live should continue to grow, backed up by solid housing prospects and a bright economic outlook.

Looking at our realtor.com Market Hotness Index (which tracks speed of supply and intensity of demand), half of these markets are also in the top 20 percent in the country for hotness, where will likely remain in the months to come. As the areas continue to grow and expand, we should see local demand strengthen. And we’re already seeing strong signs. Listings in these markets receive 1.30x times more views on realtor.com, with the top 5 markets receiving 1.55x times more views, and places like Collin County (Allen, TX) seeing up to two times more views. Demand should also be boosted by interest from other places in the country, likely bringing money that has been earned elsewhere. Supply of homes should follow a shrinking pattern but in most cases well regenerated by new construction, where these markets have the upper hand on the rest of the country.

New developments and communities should steadily replace untouched green space. However, for the most part, growth should remain limited by their physical distance and that’s where the small nature of these towns could work to their advantage. The Top 10 Best Places to Live all have populations of less than 100,000, but not for long.

Full Housing Market Highlights (MONEY’S Top 10 Best Places to Live)

The number of households in these markets combined is projected to growth 7.0 percent by 2022, more than double the rate of growth in the US overall

The median days on market in the top 10 combined 47 days, a full 17 days lower than the US overall, and 7 of the 10 markets should see supply drop faster than the national rate in 2018.

In the wider encompassing metro areas, sales prices and volume are projected to grow 4.7 and 4.5 percent year-over-year respectively.

In 2016, the share of homes flipped in these markets combined was 3.2 percent, slightly below US normal of 4.0 percent, and about half the observed rate during speculative times in the mid 2000s.

The share of foreclosed sales in 2016 in these markets combined was a mere 3.1 percent (ranging from 1.0 to 9.0 percent), with only two of the ten showing foreclosed shares above the US normal.

The realtor.com ‘housing formation versus starts index’ indicates new construction in these counties is keeping up with household growth more closely than the national average.

The median household in these markets needs 38 percent percent of income to purchase the typical home. While that’s above the recommended 30 percent, it’s still far from the levels seen in big cities where the income requirements to buy a home average a scarier 50 percent.

Since 2014, asking prices on homes have grown four times faster than household incomes in these areas, about the same as the national average.

Half of these markets are also in the top 20 percent in the country for hotness, and listings in these markets receive 1.3 times more views on realtor.com.

Local Housing Market Overview (Top 10 Best Places to Live)

1. Hamilton County (Fishers, IN)The number of households in Hamilton County is projected to grow 7.5% by 2022, almost 3 times the national rate. A Realtor.com Formation vs Starts Index of 0.96 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the top 20% hottest markets across the country, and it receives 1.6 times more views than the typical property nationally. In the second quarter of 2017, the typical Hamilton property spent 46 days on the market, selling at about the same rate as the previous year and 18 days more quickly than the typical property nationally.

Sale prices in this county are projected to increase by 3.7% year over year, and sale volume is expected to increase by 5.0%. In 2016, the share of homes flipped in this market was 1.7%. Foreclosure sales accounted for a 1.7% share of the market during this time, declining by 0.6% year over year.

Asking prices for homes in this market grew by 8.4% year over year compared to 7.2% nationally. The median household in this market needs 23 percent of income to purchase the typical home. This is below the recommended 30 percent, meaning inventory in this market remains affordable. Median income growth has not kept pace with median listing price growth, but the Realtor.com Income vs Median Price Growth Index value of 0.55 indicates that the discrepancy is typical.

2. Collin County (Allen, TX)The number of households in Collin County is projected to grow 10.0 % by 2022, close to 4 times the national rate, and is the second highest growth rate in this list of top 10 markets. A Realtor.com Formation vs Starts Index of 0.90 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the top 10% hottest markets across the country, and it receives 2.1 times more views than the typical property nationally. In the second quarter of 2017, the typical Collin County property spent 36 days on the market, selling at about the same rate as the previous year and 28 days more quickly than the typical property nationally.

Sale prices in this county are projected to increase by 4.1% year over year, and sale volume is expected to increase by 5.1%. In 2016, the share of homes flipped in this market was 2.8%. Foreclosure sales accounted for a 1.0% share of the market during this time, declining by 0.5% year over year.

Asking prices for homes in this market grew by 4.2% year over year compared to 7.2% nationally. The median household in these markets needs 35 percent of income to purchase the typical home. While that’s above the recommended 30 percent, it’s still far from the levels seen in big cities where the income requirements to buy a home average a scarier 50 percent. Median income growth has not kept pace with median listing price growth, and the Realtor.com Income vs Median Price Growth Index value of 0.39 indicates that the discrepancy is greater than the typical county nationally.

3. Los Angeles County (Monterey Park, CA)The number of households in Los Angeles County is projected to grow 4.1% by 2022, approximately 1.5 times the national rate. A Realtor.com Formation vs Starts Index of 0.61 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the top 15% hottest markets across the country, and it receives 1.4 times more views than the typical property nationally. In the second quarter of 2017, the typical Los Angeles property spent 36 days on the market, selling 5 days more quickly than the previous year and 28 days more quickly than the typical property nationally.

Sale prices in this county are projected to increase by 6.9% year over year, and sale volume is expected to increase by 6.0%, the fastest growth rates in this list of top 10 markets. In 2016, the share of homes flipped in this market was 5.4%. Foreclosure sales accounted for a 2.8% share of the market during this time, declining by 1.2% year over year.

Asking prices for homes in this market grew by 8.2% year over year compared to 7.2% nationally. The median household in these markets needs 69 percent of income to purchase the typical home, far above the recommended 30 percent. Median income growth has not kept pace with median listing price growth, but the Realtor.com Income vs Median Price Growth Index value of 0.48 indicates that the discrepancy is typical.

4. Williamson County (Franklin, TN)The number of households in Williamson County is projected to grow 9.6% by 2022, about 3.7 times the national rate. A Realtor.com Formation vs Starts Index of 0.95 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the top 20% hottest markets across the country, and it receives 1.3 times more views than the typical property nationally. In the second quarter of 2017, the typical Williamson property spent 39 days on the market, selling 1 days more quickly than the previous year and 25 days more quickly than the typical property nationally.

Sale prices in this county are projected to increase by 4.9% year over year, and sale volume is expected to increase by 4.4%. In 2016, the share of homes flipped in this market was 8.5%, the highest share of the 10 counties on this list, indicating a hotbed of investor activity. Foreclosure sales accounted for a 1.5% share of the market during this time, declining by 0.8% year over year.

Asking prices for homes in this market grew by 12.5% year over year, the second highest growth rate of all 10 counties on this list. The median household in these markets needs 35 percent of income to purchase the typical home. While that’s above the recommended 30 percent, it’s still far from the levels seen in big cities where the income requirements to buy a home average a scarier 50 percent. Median income growth has not kept pace with median listing price growth, but the Realtor.com Income vs Median Price Growth Index value of 0.69 indicates that the discrepancy is slightly better than the typical county nationally.

5. DeSoto County (Olive Branch, MS)The number of households in DeSoto County is projected to grow 4.7% by 2022, close to twice the national rate. A Realtor.com Formation vs Starts Index of 0.82 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the top 40% hottest markets across the country, and it receives 1.4 times more views than the typical property nationally. In the second quarter of 2017, the typical DeSoto County property spent 57 days on the market, selling 12 days more quickly than the previous year, and showing the greatest decrease in time spent on the market of all 10 counties on this list. The typical property also sold 7 days more quickly than the typical property nationally.

Sale prices in this county are projected to increase by 3.8% year over year, and sale volume is expected to increase by 4.2%. In 2016, the share of homes flipped in this market was 1.4%. Foreclosure sales accounted for a 6.2% share of the market during this time, declining by 0.6% year over year.

Asking prices for homes in this market grew by 13.4% year over year, the highest growth rate of all 10 counties on this list. The median household in this market needs 23 percent of income to purchase the typical home. This is below the recommended 30 percent, meaning inventory in this market remains affordable. Median income growth has not kept pace with median listing price growth, but the Realtor.com Income vs Median Price Growth Index value of 0.64 indicates that the discrepancy is slightly better than the typical county nationally.

6. Stark County (Dickinson, ND)The number of households in Stark County is projected to grow 9.0% by 2022, about 3.5 times the national rate. A Realtor.com Formation vs Starts Index of 0.51 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth about the same as other counties nationally.

In 2016, the share of homes flipped in this market was 0.6%. Foreclosure sales accounted for a 1.6% share of the market during this time, increasing by 1.4% year over year.

In the second quarter of 2017, the typical Stark County property spent 71 days on the market, selling slower than the other markets in this list but 12 days more quickly than the previous year.

Asking prices for homes in this market declined by 5.5% year over year compared to 7.2% nationally. The median household in this market needs 22 percent of income to purchase the typical home. This is below the recommended 30 percent, meaning inventory in this market remains affordable. Median income growth has not kept pace with median listing price growth, and the Realtor.com Income vs Median Price Growth Index value of 0.05 indicates that the discrepancy is much worse than the typical county nationally.

7. Douglas County (Lone Tree, CO)The number of households in Douglas County is projected to grow 9.6% by 2022, about 3.7 times the national rate. A Realtor.com Formation vs Starts Index of 0.85 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the top 10% hottest markets across the country, and it receives 1.6 times more views than the typical property nationally. In the second quarter of 2017, the typical Douglas County property spent 34 days on the market, selling more quickly than the other markets in this list and at about the same rate as the previous year but selling 30 days more quickly than the typical property nationally.

Sale prices in this county are projected to increase by 6.4% year over year, and sale volume is expected to increase by 4.0%. In 2016, the share of homes flipped in this market was 2.5%. Foreclosure sales accounted for a 1.0% share of the market during this time, neither growing nor declining since the previous year.

Asking prices for homes in this market grew by 2.2% year over year compared to 7.2% nationally. The median household in these markets needs 35 percent of income to purchase the typical home. While that’s above the recommended 30 percent, it’s still far from the levels seen in big cities where the income requirements to buy a home average a scarier 50 percent. Median income growth has not kept pace with median listing price growth, and the Realtor.com Income vs Median Price Growth Index value of 0.37 indicates that the discrepancy is slightly worse than the typical county nationally.

8. Bergen County (North Arlington, NJ)The number of households in Bergen County is projected to grow 2.9% by 2022, 1.1 times more than the national rate despite being the second lowest growth rate in this list of top 10 markets. A Realtor.com Formation vs Starts Index of 0.85 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the top 50% hottest markets across the country, but receives only 0.8 times the views of the typical property nationally. In the second quarter of 2017, the typical Bergen County property spent 47 days on the market, selling 5 days more quickly than the previous year and 17 days more quickly than the typical property nationally.

Sale prices in this county are projected to increase by 4.0% year over year, and sale volume is expected to increase by 6.5%. In 2016, the share of homes flipped in this market was 2.8%. Foreclosure sales accounted for a 4.5% share of the market during this time, increasing by 0.8% year over year.

Asking prices for homes in this market grew by 11.9% year over year compared to 7.2% nationally. The median household in these markets needs 47 percent of income to purchase the typical home. While that’s above the recommended 30 percent, about the same level typically seen in big cities where the income requirements to buy a home average to 50 percent. Median income growth has not kept pace with median listing price growth, but the Realtor.com Income vs Median Price Growth Index value of 0.61 indicates that the discrepancy is slightly better than the typical county nationally.

9. Cook County (Schaumburg, IL)The number of households in Cook County is projected to grow 1.2% by 2022, only half the national rate, and is the lowest growth rate in this list of top 10 markets. A Realtor.com Formation vs Starts Index of 0.59 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the top 50% hottest markets across the country, but receives only 0.8 times the views of the typical property nationally. In the second quarter of 2017, the typical Cook County property spent 46 days on the market, selling 4 days more quickly than the previous year and 18 days more quickly than the typical property nationally.

Sale prices in this county are projected to increase by 2.0% year over year, and sale volume is expected to increase by 2.3%, the slowest growth rates in this list of top 10 markets. In 2016, the share of homes flipped in this market was 6.4%. Foreclosure sales accounted for a 9.4% share of the market during this time, the highest share among the list of top 10 markets. However, the foreclosure share also declined by 2.7% year over year, showing the greatest improvement.

Asking prices for homes in this market grew by 9.5% year over year compared to 7.2% nationally. The median household in this market needs 32 percent of income to purchase the typical home. This is close to the recommended 30 percent, meaning inventory in this market remains relatively affordable. Median income growth has not kept pace with median listing price growth, but the Realtor.com Income vs Median Price Growth Index value of 0.64 indicates that the discrepancy is slightly better than the typical county nationally.

10. Gallatin County (Bozeman, MN)The number of households in Gallatin County is projected to grow 10.1% by 2022, close to 4 times the national rate, and is the highest growth rate in this list of top 10 markets. A Realtor.com Formation vs Starts Index of 0.70 (compared to baseline of 0.5) indicates that new construction in this county is keeping up with household growth more closely relative to other counties.

This county is among the bottom 30% hottest markets across the country, and receives only 0.8 times the views of the typical property nationally. In the second quarter of 2017, the typical Gallatin County property spent 86 days on the market, the slowest rate in this list and 22 days more slow than the typical property nationally, but selling 11 days more quickly than the previous year.

In 2016, the share of homes flipped in this market was 0.5%. Foreclosure sales accounted for a 1.2% share of the market during this time, declining by 0.5% year over year.

Asking prices for homes in this market grew by 10.9% year over year compared to 7.2% nationally. The median household in these markets needs 62 percent of income to purchase the typical home, far above the recommended 30 percent. Median income growth has not kept pace with median listing price growth, but the Realtor.com Income vs Median Price Growth Index value of 0.49 indicates that the discrepancy is typical.

MONEY’s Top 50 Best Places to Live – Realtor.com® Housing Statistics

MONEY’s Best Places to Live Methodology

For Money’s 2017 Best Places to Live list, MONEY evaluated 2,400 places on eight categories: cost of living, economy, education, housing, crime, convenience, cultural and recreational amenities, and an overall sense of pleasantness. For the first time MONEY teamed up with realtor.com® to leverage its rich data and understanding of housing markets. Fishers, Indiana, a suburb of Indianapolis, tops this year’s list at number one followed by Allen, Texas and Monterey Park, California.

MONEY looked only at places with populations between 10,000 and 100,000. They eliminated any place that had more than double the national crime risk, less than 85% of its state’s median household income, or a lack of ethnic diversity, to end with 2,400 places. They then collected about 170,000 different data points to narrow the list, and partnered with us to add realtor.com® data on housing market costs and growth. The ranking also considered data on each place’s economic health, cost of living, public education, crime, ease of living, and amenities.

Finally, reporters researched each spot, interviewing residents, checking out neighborhoods, and searching for the kinds of intangible factors that aren’t revealed by statistics. To ensure a geographically diverse set, MONEY limited the list to no more than four places per state and two per county. In the top 15, they allowed only one place per state. Rankings were derived from more than 70 separate types of data. For full methodology and sources, go to money.com/BPLmethodology.

Realtor.com® Housing Indices and Methodology

This review includes realtor.com® housing data at county level for a selection of 23 metrics on housing market health, growth and affordability, plus 17 other relevant supplementary housing metrics. The data is interpreted, normalized and summarized into three proprietary indices: Realtor.com® Housing Health Index, Realtor.com® Housing Growth Index,and the Realtor.com® Housing Affordability Index. See full details below.

Realtor.com® Housing Affordability Index: Equal weight average of normalized measures of percentage of income to buy and ratio of income vs list price 3-year compound annual growth rate. High index values (near 100) indicate lower income burden to buy a home, and better income growth against asking prices.

Phoenix housing market predicted to be No. 1 out of 100 local metro forecasts

The 2017 housing market will be a year of slowing, yet moderate growth, set against the backdrop of a changing composition of home buyers and a post-election interest rate jump that could potentially price some first-timers out of the market, according to the realtor.com® 2017 housing forecast released today.

The report also predicts the top five housing trends of 2017, as well as home prices and sales for the 100 largest metros in the U.S.

2017 National Housing Forecast
The 2017 national real estate market is predicted to slow compared to the last two years, across the majority of economic indicators. Home prices are anticipated to increase 3.9 percent and existing home sales are forecasted to increase 1.9 percent to 5.46 million homes. Interest rates are expected to reach 4.5 percent due to higher expectations for inflationary pressure in the year ahead.

Realtor.com® is forecasting the homeownership rate will stabilize at 63.5 percent after bottoming at 62.9 percent in 2016. New home sales are expected to grow 10 percent, while new home starts are expected to increase 3 percent. The forecast is based on GDP growth of 2.1 percent, a 2.5 percent increase in the consumer price index and unemployment declining to 4.7 percent by the end of the year.

Prior to this month’s election, demographics and an improving economy were laying the foundation for a substantial increase in first-time buyers in 2017, but due to mortgage rate increases over the last few weeks realtor.com® predicts first timers will face new hurdles as they navigate the qualification and buying process. These higher rates are associated with anticipation of stronger economic and wage growth next year, both of which favor buyers. However, higher rates will make qualifying for a mortgage and finding affordable inventory more challenging.

“We don’t expect the outcome of the election to have a direct impact on the health of the housing market or economy as we close out 2016. However, the 40 basis points increase in rates in the days following the election has caused us to increase our interest rate prediction for next year,” said Jonathan Smoke, chief economist for realtor.com®. “With more than 95 percent of first-time home buyers dependent on financing their home purchase, and a majority of first-time buyers reporting one or more financial challenges, the uptick we’ve already seen may price some first-timers out of the market.”

Top Housing Trends for 2017
Next year’s predicted slowing price and sales growth, increasing interest rates and changing buyer demographics are setting the stage for five key housing trends:

1. Millennials and boomers will dominate the market–– Next year, the housing market will be in the middle of two massive demographic waves, millennials and baby boomers – that will power demand for at least the next 10 years. Although increasing interest rates have prompted realtor.com® to lower its prediction of millennial market share to 33 percent of the buyer pool; millennials and baby boomers will still comprise the majority of the market. Baby boomers are expected to make up 30 percent of buyers in 2017 and given they’re less dependent on financing, they are anticipated to be more successful when it comes to closing.

2. Midwestern cities will continue to be hotbeds for millennials – Midwestern cities are anticipated to continue to beat the national average in millennial purchase market share in 2017 with Madison, Wis.; Columbus, Ohio; Omaha, Neb.; Des Moines, Iowa; and Minneapolis, leading the pack. This year, average millennial market share in these markets is 42 percent, far higher than the U.S. average of 38 percent. With strong affordability in 15 of the 19 largest Midwestern markets, realtor.com® expects this trend to continue in 2017 even as interest rates increase.

3. Slowing price appreciation – Nationally, home prices are forecast to slow to 3.9 percent growth year over year, from an estimated 4.9 percent in 2016. Of the top 100 largest metros in the country, 26 markets are expected to see price acceleration of 1 percent point or more with Greensboro-High Point, N.C.; Akron, Ohio; and Baltimore-Columbia-Towson, Md., experiencing the largest gains. Likewise, 46 markets are expected to see a slowdown in price growth of 1 percent or more with Lakeland-Winter Haven, Fla., Durham-Chapel Hill, N.C.; and Jackson, Miss., undergoing the biggest shift to slower price appreciation.

4. Fewer homes on the market and fast moving markets – Inventory is currently down an average of 11 percent in the top 100 metros in the U.S. The conditions that are limiting home supply are not expected to change in 2017. Median age of inventory is currently 68 days in the top 100 metros, which is 14 percent – or 11 days – faster than U.S. overall.

5. Western cities will continue to lead the nation in prices and sales – Western metros in the U.S. are forecast to see a price increase of 5.8 percent and sales increase of 4.7 percent, much higher than the U.S. overall. These markets also dominate the ranking of the realtor.com® 2017 top housing markets, making up five of the top 10 markets on the list (Los Angeles, Sacramento and Riverside, Calif., Tucson, Ariz., and Portland, Ore.) and 11 of the top 25 (Colorado Springs, Colo.; San Diego; Salt Lake City; Provo-Orem, Utah; Seattle. and Oxnard-Thousand Oaks-Ventura, Calif.)

These top 10 markets are forecast to see average price gains of 5.8 percent and sales growth of 6.3 percent, exceeding next year’s anticipated national growth of 3.9 percent and 1.9 percent, respectively. But when compared to last year, prices in eight of the top 10 markets are expected to decelerate with only Los Angeles and Tucson, Ariz. showing stronger growth than last year. Other commonalities among the top 10 housing markets include: relatively affordable rental prices, low unemployment, large populations of millennials and baby boomers, as well as a high number of listing views on realtor.com®.

See Table 1 for the ranking of the top 100 largest metros in the U.S., as well as their price and sales forecasts.

About realtor.com®
Realtor.com® is the trusted resource for home buyers, sellers and dreamers, offering the most comprehensive source of for-sale properties, among competing national sites, and the information, tools and professional expertise to help people move confidently through every step of their home journey. It pioneered the world of digital real estate 20 years ago, and today helps make all things home simple, efficient and enjoyable. Realtor.com® is operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit realtor.com®.